More volume please says big & bulky last-mile carriers
Yes! I still have furniture on my mind!! I’m kind of digging this yellow chair and ottoman for my office. However, it may be a bit too much since the walls are painted a soft yellow. As such, my search continues and it may be continuing into 2022 since inventories remain low, shortages in raw materials continue, and overseas delivery delays impact the furniture industry.
Sigh. I’ll wait, but for folks that are throwing down some serious money on furniture and on other big and bulky items like appliances, delivery carriers are benefiting.
So far it’s been a good year for many big & bulky last-mile carriers such as XPO Logistics, JB Hunt, and others. But, it could be better if more volume was in their pipelines. “Availability of inventory, particularly across the appliance and furniture categories is tempering what would otherwise be even stronger demand for our services,” noted a JB Hunt executive on the company’s recent Q2 earnings call.
According to the US Census Bureau, furniture & home furnishing store sales are up 43% for the first half of 2021 compared to the same period in 2020. Compared to the same period in 2019, furniture & home furnishing store sales are up 21.3%.
For electronics & appliance stores, sales are up 36.9% for the first half of 2021 compared to the same period in 2020 and up 5.0% for the same period in 2019.
However, supply chain pains upstream are holding back many of these retailers and last-mile big and bulky carriers’ revenue potential.
“Our special order lead-times have increased to 12 weeks to 20 weeks, depending on the vendor, causing some softening in our special order business,” president of furniture retailer, Haverty’s, Steven Burdette said during the company’s Q2 earnings call in July.
“Today, our backlog is about eight times higher than in pre-COVID and sixteen times higher than at the end of last fiscal year,” executives from furniture retailer, La-Z-Boy, said during the company’s recent earnings call in June.
“From a supply chain perspective in the U.S., we're still trying to catch up,” Whirlpool executives recently said during their earnings call.
Carriers profit
J.B. Hunt’s Final Mile Services group recorded a 52% increase in revenue to $212 million for the second quarter, the period ending June 30. Operating profit was $10.7 million compared to a $5.2 million loss for the second quarter of 2020.
J.B. Hunt provides both asset and non-asset big and bulky delivery and installation services and notes in its earnings presentation that is the largest final mile asset network in the US.
The company benefited from an increase in customer contracts implemented over the last year. Year-over-year comparisons are extraordinary due to the temporary suspension of operations at several of its customers’ sites as a result of COVID-19.
Meanwhile, XPO Logistics’ Last-Mile group reported second quarter revenue of $269 million, a 23.4% increase from the same period in 2020. Net revenue increased 12.3% to $91 million.
Ryder’s Last Mile group is incorporated into the Supply Chain Solutions (SCS) division. According to the second quarter presentation, the Last Mile group represents about 10% of SCS’s total revenue and is profitable. So, Last Mile’s approximate revenue is about $77.6 million for the second quarter of 2021. Using the same assumption, second-quarter revenue for 2020 for the Last Mile was about $51.9 million which means Ryder’s Last Mile’s latest quarterly revenue increased 50% over the same period for 2020.
Big and bulky last-mile carriers such as JB Hunt, XPO Logistics, and Ryder will likely continue to grow revenue and profits for at least through the end of this year.
According to Haverty’s CEO, Clarence Smith, shipping challenges will be a problem until the spring of 2022.
But not only will big and bulky last-mile carriers benefit from the existing environment but also from parcel last-mile providers, FedEx and UPS because of surcharges that the two parcel carriers have added to discourage big and bulky items from entering its sorting facilities which are designed for smaller items. An Additional Handling surcharge is also typically added by FedEx and UPS as well to compensate for the time it takes to handle larger, bulkier items.
When deciding whether to use a carrier or a parcel last-mile provider, shippers will need to compare costs and surcharges, delivery times, and any other additional service that may be needed.
In addition, as noted in an earlier story I wrote, some retailers, such as Costco, are delivering their own big and bulky items as part of their customer satisfaction strategy.
-Cathy
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